The once Great Chinese Dragon Economy seems to be burning out as its economic indicators continue to weaken and smolder. One such indicator is China’s rapidly falling industrial silver consumption. At one time, Chinese industrial silver fabrication was consuming nearly a third of the global total. However, this has fallen considerably over the past two years.

According to the data in the 2017 World Silver Survey, China’s industrial silver consumption fell 15% in 2016, from 169 million oz (Moz) in 2015 to 144 Moz last year. That’s a 25 Moz decline in just one year:

Furthermore, Chinese industrial silver fabrication has fallen 23%, (42 Moz) from its peak of 186 Moz in 2014. While some may believe the decline in China’s industrial silver usage had something to do with rising silver prices. This couldn’t be, as the average annual silver price was $19.08 in 2014, $15.68 in 2015 and $17.14 last year.

So, as we can see, the Chinese consumed a great deal more silver for industrial silver applications when the price of silver was higher in 2014 than either 2015 or 2016. Which means, it had nothing really to do with the price. That being said, there is an even more alarming trend.

Chinese industrial silver demand last year was the lowest since the 2009 Global Financial Meltdown. In 2009, China consumed 137 Moz of silver for its industrial applications, compared to 144 Moz last year. Moreover, China continued to see a slow but steady increase in silver consumption from 2010 to 2014 for industrial fabrication, but it really started to deteriorate over the past two years.

This suggests that domestic and global demand for Chinese industrial products (that use silver in their manufacture) has been declining significantly since 2014. Some readers may assume that the decline in Chinese industrial silver consumption is due to the efficiency in solar manufacturing. While the manufacturing of Photovoltaic Cells has most certainly become more efficient, from 0.5 grams silver per cell in 2011 down to 0.15 grams in 2016 (data: 2017 World Silver Survey), consumption of Solar PV silver increased to 76.6 Moz in 2016 versus 57.2 Moz in 2015.

Thus, overall consumption of silver for PV Solar manufacturing has continued to increase from 51.8 Moz in 2014 to 76.6 Moz last year. So, this does not explain the big drop in Chinese silver industrial fabrication over the past two years.

Now, if we look at global silver industrial fabrication over the past decade, we can spot an interesting trend:

When the price of silver was at its highest level in 2011 (average was $35.12), the world consumed the most silver for industrial applications (661 Moz). However, global silver consumption in the industrial sector has continued to decline, reaching a low of 562 Moz last year. This is nearly 100 Moz less than it was in 2011.

Yes, it is true that the world is using less silver for Photography, but it hasn’t fallen that much since 2011. According to the data in the 2017 World Silver Survey, silver consumption in the Photographic industry only fell 16 Moz since 2011. However, the biggest decline in silver consumption came from the “Electrical & Electronics” sector. Silver consumption in that industry fell from 291 Moz in 2011 to 234 Moz last year.

Again, we can’t blame rising prices for the decline in silver consumption in the electrical or electronics sector because it fell more than 50% since 2011. You would think silver consumption in electronics would have risen as the price fell by more than half.

So, what does this all mean? It means the world economies that are being propped up by a massive amount of monetary printing, debt and Central Bank asset purchases aren’t really growing in REAL TERMS, but rather they are contracting.

Sure, some sectors might be growing, such as the automobile industry, but this is not sustainable. Why? Because, using easy money, subprime finance and extending payments are the last stages before the market falls off a cliff, as it did in 2008.

Of course, many investors have heard all this already as they become increasing frustrated that the “TIMING OF THE CRASH” continues to be delayed. I see this sentiment on my site as well as others. While I can understand the frustration these investors are feeling… it doesn’t bother me a bit. I moved out of the BIG CITY in 2007 and relocated to the country when I knew the market crash was coming. So, when everything fell apart in 2008 and 2009, I wasn’t surprised. However, I was surprised how long the Central Banks could prop up the system.

But….. there is an expiration date or time when the propping will no longer work. While I don’t know the exact timing of this event, I can tell you that the lousy indicators taking place in the oil industry provides a clue that it will likely occur sooner than most realize. Now, I am not saying tomorrow, next week-month or next year… but I can see BIG PROBLEMS by 2020, and it could come sooner.

Which is why, you don’t want to play with fire and TIME your exit out of these insane markets. However, most investors think they KNOW BETTER. So, it will be interesting to see when things fall apart, just how well that strategy worked.

IMPORTANT NOTE: Falling industrial silver demand is not a bad indicator for the future price of silver. First… I don’t look at short-term supply and demand factors as indicators of price. Second… I focus on the longer term trends in the silver market for clues on the timing when the value of silver will move to a high-quality store of value. Lastly, the most important indicator for the future value of silver (or gold) is energy. This energy fundamental is overlooked by the majority of precious metals analysts.

Please stay tuned over the next several weeks as I plan on putting out some interesting articles. While most of the respected precious metals analysts continue to discuss the economy and financial system in terms of FIAT MONEY, DEBT, DERIVATIVES, GEOPOLITICS and CENTRAL BANKS, very few if any understand the dire energy predicament we face.

I believe those who follow the work on the SRSrocco Report site will be more informed about the coming ECONOMIC COLLAPSE (due to energy) than those analysts who remain focused on the more superficial information and data.

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Hi Steve,
How does the decreasing rate of yearly global silver mining supply compare with the decline in silver demand? I still believe that supply and demand will be key as time goes forward and the manipulation ends.

It’s hard to tell because there is volatility in annual Physical Silver & ETF Investment demand. Total silver demand fell from 1,151 million oz (Moz) in 2015 to 1,029 Moz in 2016. Most of that was due to declining Jewelry & Coin-Bar demand.

You must look at the silver market this way. Demand for silver reached a peak in 2015 at the 1,151 Moz on the back of record Silver Bar & Coin demand of 291 Moz. However, the price of silver fell to a low of $15.68. So, SUPPLY & DEMAND really isn’t a determining factor for silver.

Again, I look at the changing Silver Supply & Demand figures as an ONGOING TREND. Falling Silver Supply and Skyrocketing Silver Investment demand will push the price of silver to a new record. While this may seem like it is due to more DEMAND than SUPPLY… the actual reason is silver is finally moving towards is HIGH QUALITY STORE OF VALUE.

Yes… Chinese figures are not 100% reliable and demand has shifted to other countries. True. However, OVERALL INDUSTRIAL SILVER FABRICATION has fallen from a peak of 661 Moz in 2011 to 562 Moz last year. So, even though there is Industrial Silver Fabrication shifting HERE & THERE, overall Industrial Silver Demand is still heading lower.

Furthermore, the overall decline in Industrial Silver Consumption is due to FALLING GLOBAL DEMAND as world economies continue to weaken. And a large percentage of it is stemming from China.

Price spikes being unsustainable due to lack of economic demand. So even as demand picks up with lower prices the oil industry collapses due to lower prices. Is that the gist of it?
And the Million dollar question; What sort of time frame for this to play out?
By the way I enjoy reading your work, always a different slant.

Thank you for the kind words. I try to put out as much original information as possible to give investors, especially precious metals investors an idea of what is changing in the markets. I read and listen to a lot of analysts talking about the same things over and over. So, it is important that precious metals investors receive new original information as much as possible.

Only on a site like this would a fall in Silver consumption be heralded as a trigger for higher Silver prices. Lower silver consumption means lower silver prices its economics 101.

Also only on a silver-bug site would lower Silver consumption be proof that an economy is tanking. Silver consumption is for far down the list of indicators of economic slowdown it is never mentioned in sensible discussions.

Did you read the article??? LOLOL. The price of silver has fallen in half since 2011. In 2011, the world consumed the most silver for industrial applications. While some substitution has occurred, why would you substitute another metal if the price has fallen in half.

According to the 2017 World Silver Survey, silver consumption for Industrial usage has fallen due to LACK OF DEMAND, not Substitution.

I’ve been a Hills Group fan and believer for several years now. It is great to see this site broadcasting the truth of our energy predicament as explained in detail by the Hills Group, and going even further to relate that core message to silver and gold markets trends as well as other financial/economic trends we see in the news. Nothing going on in the economic and financial world these days makes any sense unless one understands the underlying stress that rapidly deteriorating energy is responsible for. I read over on Wolf Street the other day that Wolf expects the “markets” to zig-zag up and down for “decades”. Now THERE is a guy who just doesn’t understand the energy predicament that the global economy is facing. Fortunately, Steve does, which makes this site a pleasure to visit. Keep the info coming!

Steve, thanks for the work you have done. Have been a fan of your blog. One question with the rising popularity of cryptocurrencies. How do you think this impacts gold and silver prices moving forward? How does energy impact cryptocurrencies? At the same time, I hope to get an opinion of the possibility of Universal Basic Income. Thanks again.

Ong Beng Hwee,
Good question. I am in the preliminary stages of research into Crypto-Currencies versus Gold & Silver for a new PAID REPORT. I am finding out very interesting information that helps remove some of the MYSTERY behind these crypto currencies.

First… I do think funds will continue to move into cryptocurrencies over the next several years. However, I also believe the current price of these cryptos is severely over inflated, and will likely fall over the next month or more before they level out and move higher over the mid to longer term. But, again, this is my analysis and I could be wrong. There is a lot of UNKNOWNS in these crypto currencies.

Second… Gold & Silver will still be the BEST SAFE HAVENS to own in the future. Although, I don’t see any problem with putting a few bucks in some of these cryptos as a PURE SPECULATION PLAY. A few bucks that you don’t care if you lose. This is much different than protecting the majority of ones wealth in physical gold and silver.

Geez, where do you trolls come from? Are you living in your parent’s basement? If you do not appreciate Steve’s articles, research or insight. Don’t read anything at all and take your comments elsewhere……..

The biggest decline in silver consumption came from the electrical & electronics sector because of the declining sales. The sales have been declining because the purchasing power of working class have been declining due to the depreciation of fiat currencies all over this planet. If silver hoarders want to see the prices of their silver bars and coins skyrocketing, they should agitate the working class to revolt against the government and take control of the means of production as a preparation to abolish fiat currency system and build a new monetary system based on sound money (gold, silver, copper) that overseen by community councils (soviets).

If you are going to say “your articles ignore reality”…you might want to state what your concept of “reality” is. Steve spends a lot of time and effort creating charts and providing information backed by facts. Let’s hear what your facts are and maybe you can provide a chart or two while your at it.

Hello Steven, Great insigths as always !
I would like to ask you one question about the numbers in the SI report.
They have posted -499 Moz defictis in physical supply since 2007 and yet the stockplies in the same period have grown from 1,293 to 2,590 Moz (page 37 of the report) How is that possible ?
I see only 2 explanations that the numbers are badly cooked or there is some unknown stockpile somewhere nobody knows about but even then still they should mention that discrepancy. BR.

The difference between an ANNUAL MARKET SILVER DEFICIT and the rise in ABOVE GROUND STOCKS is this….. The majority of that 2,590 Moz of silver is held in Custodian Vaults around the world. This is outside the Exchanges and the supposed ETF Inventories. Basically, large institutions, parties or individuals are stockpiling silver in vaults. Thus, the market suffered annual deficits, but the supply came from Central Bank and private silver stocks over the past two decades.

To build this 2,590 Moz of silver stockpiles, it came from Central Bank sales and unknown sources that have been holding onto silver ever since it was removed from coinage decades ago. The DEFICITS are real, but so are the Custodian Stocks.

Basically, we had 100+ years of Silver being removed from coinage and put into Central Banks inventories as well as private. This supply has been depleted over the past several decades and is now apart of the 2,590 Moz shown in 2017 the World Silver Survey.

However, this is not much silver when we figure the present value of that 2.6 billion oz is approximately $47 billion. The United States pays about $40-$45 billion a month just to SERVICE ITS $20 TRILLION IN DEBT……. LOLOL.

Maybe you didn’t read the entire article, so I don’t blame you for your incorrect assumption that falling Chinese Industrial Silver demand means a falling price.

As I stated in the article, we had the highest demand for silver last year, but the price was at a low of $15. Supply & Demand are not really good indicators of price, especially for the precious metals.

I have a view on this Gary Samson; I look for small miners (Generally shares under $1.00 in value) already in production or late stages of development with very little debt. I do my own charts and if the chart tells me (based on my criteria)the share is not overpriced I give it some consideration. The idea is to spread the little I have around. I like to think if I lose some I will win some and come out in front in the end.

I agree we can look at these “middle” inputs into the grinding economic industrial machines, and think hmmm, are we slowing down some here? I almost don’t trust any data since the era of easy money has been ushered in, silver fabrication seems pretty steady to me.

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